Chapter 2: Use the following information to answer the questions below.-Free market price of oranges: P o = $4.50 / thousand kg- Qd = Qs at Q* = 240 thousand kilograms- Market price of apples: P A = $3.00 / thousand kg- Price elasticity of supply for oranges = 0.3- Cross-price elasticity of supply for oranges with regards to the price of apples = 0.1- Price elasticity of demand for oranges = -0.6- Cross-price elasticity of demand for oranges with regards to the price of apples = 1.5 a) Find the supply and demand equations for oranges. Qd = 384 – 32P Qs = 168+16P b) If the price of apples moves from $3.00 to $3.50, what will happen to the quantity demanded of oranges? It will increase to 300. c) What does your answer in b seem to suggest about the relationship between oranges and apples. It suggests both goods are substitutes. d) With price of apples being $3.00, what would happen if the price or oranges was regulated at $5.00 per thousand kilograms? It would create a surplus in the orange market of 24 thousand kg. In other words, farmers would be willing to produce 24 thousand kg or oranges more than what the consumers would be willing to consume.

Chapter 3: Which of the following, is not a characteristic of consumer preferences in regards to goods:

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